London-headquartered insurer Aviva has reached an agreement with Allianz to sell its entire shareholding in Aviva Poland for €2.5 billion in cash.
The deal, which values the Polish business at €2.5 billion, follows the sale of Italian P&C unit Aviva Italia S.p.A. to Allianz for €330 million earlier this month.
In fact, the divestment of Aviva Poland is the eighth transaction Aviva has announced in the past eight months, as the company looks to refocus its on its strongest business in the UK, Ireland and Canada.
However, Aviva confirmed that this latest sale will be the final one in the effort to restructure its portfolio.
“The sale of our Polish business is an excellent conclusion to the refocusing of our portfolio announced just eight months ago,” said Aviva CEO Amanda Blanc.
“The sale of our eight non-core businesses will generate total cash proceeds of £7.5 billion. We have made significant progress with our debt reduction plan and in due course we will make a substantial return of capital to shareholders. Our strategic focus is now on our strongest businesses in the UK, Ireland and Canada where we have leading market positions and strong growth potential.”
In 2020, Aviva Poland’s IFRS profit after tax was £130 million, and the gross assets and net assets value of the business were £3.9 billion and £0.4 billion.
Aviva Investors Poland, which manages funds of Aviva Poland, will be part of the transaction. The assets under management of Aviva Investors Poland was £3.7 billion at the end of 2020 and IFRS profit after tax last year was £4 million.
Aviva expects to use the proceeds from the deal to support its previously communicated capital framework of debt reduction, investment for long-term growth and return of excess capital to shareholders.
The transaction is subject to customary closing conditions, including regulatory and anti-trust approvals, and is expected to complete within 12 months.
The purchase will make Allianz the fifth largest insurer in Poland and, serves to consolidate its leading position in Central Eastern Europe (CEE), making it the number two player in terms of operating profit.
Allianz states that once the €2.5 billion deal has been finalised, it’s expected to be immediately earnings accretive and comprises a purchase price of €2.7 billion and a dividend payment of €200 million.
By assuming Aviva Poland, Allianz expects to double its revenues in the Polish marketplace and achieve a balanced mix of business between P&C and life insurance.
Additionally, the insurer will acquire a 51% stake in each of Aviva’s life and non-life bancassurance joint ventures with Santander.
Oliver Bäte, Chief Executive Officer (CEO) of Allianz SE, commented: “We are delighted to further strengthen visibility of the Allianz brand in Central Eastern Europe and pursue our successful growth strategy in the region. By combining our insurance and digital expertise and strong investments in technological innovation, customers will benefit from our innovative products and outstanding services.”
Klaus-Peter Roehler, Member of the Board of Management of Allianz SE responsible for insurance in German-speaking countries and Central Eastern Europe, added: “We are very pleased to enter into this agreement as the acquisition of Aviva’s business will reignite growth in Poland and produce a scale effect in the entire CEE region.
“With a customer-first approach to design and distribution, and using innovation and technology as key enablers to deliver customer satisfaction, we see this as a fantastic opportunity to strengthen our footprint.”